Lutheran Testimony Before The New York State Assembly Standing Committee On Health

Posted Date: 2/13/2013

We are here to implore this committee to
hear the cries of the institutions most in need, to tell you that there
is a relatively simple change to make that will assure equity and
stabilization, and one that will assure that the great efforts you have
already taken will succeed.

The following testimony was prepared by Wendy Z. Goldstein, president
and CEO (at right), and Claudia Caine, EVP/COO and hospital director
(far right), Lutheran HealthCare. Presented by Claudia Caine to the
N.Y.S. Assembly Standing Committee on Health on February 8, 2013 at
Brooklyn's Brooklyn Borough Hall.

We, at Lutheran HealthCare, are grateful for this opportunity to
testify today to this esteemed panel. Hurricane Sandy has put an
enormous strain on the already frail health care providers in Brooklyn. I
want to take one moment to acknowledge the efforts of my colleagues and
staff at Lutheran who worked tirelessly, without relief, to absorb the
enormous volume of patients – which, at the height of the crisis,
doubled the number of patients seeking care in our Level I Trauma
Center.

Unfortunately, however, the real storm is still brewing and Brooklyn is directly in its path. And this storm promises to be a doozy. It is the perfect storm because
it is a confluence of elements: additional Medicare cuts,
Disproportionate Share (DSH) reductions, superimposed on an already
fragile set of providers. We have deluded ourselves into thinking that
the unplanned closure of hospitals is easily remedied by opening more
primary care facilities. We support the expansion of ambulatory, primary
care and in fact, Lutheran Family Health Centers is one of the state's
largest providers with 65 such sites, but let us not fool ourselves,
ambulatory care offers as much protection as an umbrella in a tropical
storm. When care requires intensive care units, operating rooms, trauma
centers, cardiac surgery, cancer treatment, stroke intervention, hip
replacements and on and on and on, we turn to our hospitals. And in
Brooklyn, we are at impending risk of finding them submerged. Brooklyn
cannot be safe and dry without making sure that there are adequate
numbers of hospital and nursing home beds. With several hospitals in, or
on the verge of, bankruptcy, this borough faces an imminent and very
real risk of not having a safety net to protect us in this storm.

We applaud Assemblyman Gottfried who, through his legislation,
demonstrates true understanding of the issue of the fragility of the
hospital safety net. He has set forth a definition of that safety net in
order to make sure that, as directed by the ACA, charity care dollars
go to the hospitals that truly serve the poor. These hospitals, unlike
others in the state, rely almost entirely on government payors and
therefore have no ability to shift costs from those government payors to
private, commercial insurance companies. The assemblyman has taken the
first steps to allocate dollars where, and to whom, they were intended.
While the intentions of the legislation are critical, we need to make
sure that unintended consequences do not occur, and that the outcome of
any re-distribution does not harm, but helps, true safety net providers.

We would, therefore, suggest one, additional criteria to further
refine this definition: that the safety net providers must demonstrate,
not only high proportions of Medicaid but low commercial proportions. We
suggest no more than 25% of a hospital's payor mix be commercially
insured in order to be eligible for charity care dollars. This change
would impact upon a relatively small number of hospitals, statewide, but
these are exactly the institutions that need special help to maintain
viability. Ignoring this will lead to disaster in Brooklyn and
ultimately elsewhere.

Lutheran is often referred to as one of the well-managed hospitals
that is not on the brink of collapse. While we certainly appreciate the
accolades, the changes taking place as we speak threaten the foundation
and the fabric of our essential institution and the care and the jobs it
provides. We are being pushed over the edge by the aforementioned
effects of health reform and N.Y.S. budget reductions. Between 2009 and
2013, Lutheran Medical Center will have absorbed $44 million in cuts to
its income levels ($28 million in Medicaid cuts and $15 million in
Medicare cuts). And when a hospital has an operating margin of less than
1%, these cuts serve to completely destabilize it and threaten its
continued existence. These combined factors make the temporary closure
of just one hospital look insignificant and inconsequential.

We are acutely aware of the very real financial issues that this
committee, this state and this federal government face. But, unless you
understand the unique issues facing the true safety net hospitals and
unless you are willing to take concrete steps to protect them, we will
end up in the exact position in which Interfaith, Brookdale, Victory
Memorial and LICH have found themselves. To assume that we can sit back
and continue to absorb the kinds of cuts being imposed is to pretend
that the cancer we cannot see will not kill us. There are no
institutions more at risk and more fundamentally important than the
safety net hospitals. We are here to implore this committee to
hear the cries of the institutions most in need, to tell you that there
is a relatively simple change to make that will assure equity and
stabilization, and one that will assure that the great efforts you have
already taken will succeed.

To insure that safety nets receive their fair share of the
indigent care pools we must agree on the true definition of what a
safety net hospital is. The state must then "weight" them appropriately
and direct DSH funds to those "disproportionate share" institutions.

This is a safety net hospital:
40% or greater Medicaid Discharges (we are at 50%)
25% or less Commercial Discharge (we are at 16%)
2.5% or greater Charity Care Costs (we are at 8%)